Series: Everyday Estate Planning - Planning for your Bank Accounts

Unlike real estate and some other kinds of assets, estate planning for bank accounts is very simple and can be done without an attorney’s assistance in most cases.

For most bank accounts under $75,000 in value, the account is exempt from the probate process, so your heirs merely need to bring a small esta
te affidavit to the bank along with a death certificate to receive the funds. However, for non-exempt accounts, probate is required unless you follow one of the following procedures:

1) The simplest way to leave a bank account to someone upon death is a Pay-on-Death designation to the intended recipients of the funds in the account. You can list one or several persons to receive the funds in different percentage values upon presentation of identification and a death certificate. The chief advantage of this approach is its simplicity, but that is also its main downside. If the beneficiaries are subject to a judgment, divorce, bad business debts, or disability, the funds may not have their intended effect. Further, POD (Pay-on-Death) to minors comes with its own complications too numerous to address in this post.

2) Another way to leave a bank account to beneficiaries is through a Pay-on-Death designation to a Trust. The main advantage here is that the money will still pass to the intended beneficiaries, but with the contingency plans and flexibility offered through the Trust document. This tends to be the most common approach we use with our clients when coupled with a power-of-attorney to allow fund management during your lifetime if you become disabled while bypassing any court-ordered conservatorship requirements.

3) Finally, you may title the account in the name of your Trust during your lifetime. This eliminates the need for your Trustee to present proof of death to the bank and the associated waiting period to receive the death certificate. However, many people do not like the appearance of writing check out of their bank account. Further, some banking institutions do not allow this approach without exhaustive compliance and monitoring, negating the convenience factor.

Depending on your family situation, asset structure, and banking institution, any of these 3 options can be effective, appropriate, and convenient solutions to a common problem requiring probate for middle class families.

If you have any questions or concerns about estate planning for your bank accounts, feel free to contact us anytime at 435-572-0807.